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S. Africa Credit Growth Slows

South Africa’s private sector credit demand growth slowed to 5.71% in July from 6.16% in June, central bank data showed on Wednesday, Reuters reported. Expansion in the broadly defined M3 measure of money supply rose to 6.81% from 5.96% in the previous month. Analysts had expected growth in private sector credit to have held broadly steady at 6.1% in the review period. The recent interest rate reduction, and the possibility of a further cut in 2017, may not translate into meaningfully higher demand for credit given that retail banks tightened credit criteria for both households and companies, said Investec economist Kamilla Kaplan. If money supply growth slows, it can have a negative effect on economic growth by leading to tighter lending. Conversely, when money supply increases, it typically increases the availability of loans, which individuals and businesses use to make purchases. The higher the money supply growth, the higher the growth in available funds.